Capital gains tax hits £15bn
One of the biggest surprises during the Covid period was that rather than companies going into liquidation and shares sales stagnating as anticipated, the number of transactions we saw as a firm actually soared. This appeared to be driven by the new way of working (for example hybrid working), and firms needing to adapt to survive. As a result, some shareholders took early retirement, some companies demerged where shareholders that had previously worked well together could no longer agree on what the future of their business looked like. As the office of Tax Simplification report was released at a similar time, prompting a significant drive for business owners to sell before the 10% CGT rate was removed, it is no surprise to see that CGT revenues exceeded £15 billion for the first time in 2022.
Of course the 10% rate was not actually removed in the budget, or in the Autumn Statement, so business owners who have not yet sold are still able to take advantage of this. As the cost of living soars and means the cost of running a business will similarly rise we anticipate even more business sales in the coming year. There are a number of ways in which a business can be sold though, each with their own tax consequences and practical considerations. If you are considering selling your business in the next couple of years then it is best to start thinking about how you might do this now, to ensure you receive maximum value from the purchasers and qualify for the maximum tax reliefs available.
If you are interested in discussing this further, please do not hesitate to get in touch with our Associate Tax Director, Gemma Hedges on 023 8046 1259